Help with workplace pension

cloud_dog

Linton wrote: »

The second way is correct for Salary Sacrifice as SS reduces Gross Salary. NI is charged on gross salary

Caspeia, there was a link posted earlier regarding the in's and out's of SS but the main thing to understand is that SS monies are paid by your company, they are never associated with you, which is why NI is not payable on those monies, and as Linton advised your salary is actually reduced (reported to HMRC) lower than your contracted salary.

Have a read of this Money Advice Service article on SS.

Caspeia

That's me filled out my paperwork so I've sacrificed 3% of my salary. My workplace only allow us to change the amount once a year unless there is a big change in our life (baby, house move, reduction in hours etc)
However this month will be the first month of my new wage. We had to fight for a pay rise and we managed to get it. Our wage has only increased 1 or 2% at a time in the last few years so the gap between us and minimum wage got closer and closer.
I'm going from £17850 to £20k, 12% pay rise. So even sacrificing 3% of my wage for pension I'll still see a 9% pay rise on my take home pay anyway!
We are getting a further 2% pay rise in October (my workplace gives everyone who isn't on minimum wage a 2% increase every October) so that will be a bit more into my pension every month.

I'm determined to have enough money in retirement. My gran and grandad both saved a lot during their working time and have good pensions and are now very comfortable in their retirement. My gran goes off on holidays 6 or 7 times a year, she went on a 4 month round the world cruise to celebrate her retirement. I see my husbands grandparents struggle as they only have their state pensions to rely on.

We've been a bit silly with money the past few years so I'm determined to get us on track. We're both only 24 so we have 40 years or so to get everything sorted.

cloud_dog

For a relative young 'un, you've done the right thing to consider increasing your contributions and in asking the questions.

I know it's a bit of a cliche but your future self will look back with a big smile at the consideration and actions you've taken.

Good luck to.

Just for awareness, if you didn't get paid via SS then a LISA would have been a better (financial) option than additional pension contributions for a BRT payer.

Caspeia

Thanks everyone for their help. Just wanted to update. I did muck up a bit as I thought if I give up the 3% then my 5% contribution will still come off. That wasnt correct so changed my sacrifice to 8% - glad I double checked!

Just got my payslip for this month.

Total of £218.40 into my pension each month. Which is 13% of my salary.

Take home pay was only reduced by £24 compared to my colleagues. They laughed at me when I told them why my payslip was less (they asked) apparently theres no point in putting extra into my pension according to them!

JoeCrystal

Caspeia wrote: »

Take home pay was only reduced by £24 compared to my colleagues. They laughed at me when I told them why my payslip was less (they asked) apparently theres no point in putting extra into my pension according to them!

:rotfl: I think you will be the one laughing in the end! Nice work!

Caspeia

Thanks!

£24 loss to take home pay but its £68.40 more into my pension than they are contributing! We're getting another 2% payrise in October aswell so pensions contributions will go up again